Cocoa farmers in Ghana are hoarding beans in anticipation of higher prices, limiting supplies, Reuters reported on Monday.
The global cocoa market has been looking to recover from last year’s poor harvests.
According to the report, farmers, buyers and officials from the state regulator in Cocobod in Ghana confirmed that traders have been hoarding cocoa beans. The scale of stocking is not yet clear.
“I have more than 300 bags, but I won’t sell,” a cocoa farmer in south-central Ghana told Reuters.
I will only sell after Christmas. We want to see if they will increase the price as they said.
Why are farmers hoarding?
Officials and sources told Reuters that farmers were reacting to comments by Ghana’s Vice President Mahamudu Bawumia.
The Vice President told supporters of the ruling New Patriotic Party four weeks ago that the government would raise prices for cocoa farmers.
Bawumia, who is running for presidency in December 7 elections, was speaking in Sefwi Wiawso in southeastern, one of the country’s largest cocoa-growing towns.
The Vice President has since then said his comments have been misunderstood.
Cocoa prices: smuggling woes
Ghana lost more than a third of its 2023-24 cocoa output to smuggling, according to Cocobod officials quoted by Reuters.
Last year, Ghana’s cocoa output fell to a more than a decade low, which pushed global prices to record highs.
In a bid to boost farmer incomes and deter smuggling, Ghana raised the fixed farmgate prices by 45%.
The country fixed its prices at 48,000 cedis, or just under $3,000, per metric ton for the 2024/25 season, which opened in September, Reuters reported.
However, Ivory Coast, the largest producer of cocoa, raised its prices to 1,800 CFA francs or $3,000 per kilo, just slightly above Ghana.
No price adjustments
Local media in Ghana quoted Bawumia as saying that the government would bring the farmers’ price on par with Ivory Coast’s.
However, Bawumia told Reuters that there would only be a price adjustment in the case of a “significant difference” between the two countries’ prices.
Still, many farmers believe that the government is likely to raise prices.
Cocoa purchases have slowed in Ghana in October as farmers have been stocking up beans in anticipation of higher prices.
A senior buyer also told Reuters that some farmers had even asked for beans that they had sold to be returned after hearing the government may hike prices.
Cocobod CEO Joseph Aidoo told local media on Monday that prices will only be raised if the Ghanaian currency depreciates, limiting the incomes of farmers.
However, Samuel Adimado, president of Ghana’s cocoa buyers’ association said the current price was optimal for farmers and would help Cocobod clear its debts, according to Reuters.
Adimado told Reuters:
The question is, how long can you hoard? Once it’s not smuggled out, they (farmers) will eventually release it.
Mixed weather conditions
The weather conditions in the major cocoa-producing regions of West Africa remain uncertain.
Rains in Cameroon and Nigeria have led to black pod disease, increasing farmers’ costs as they need to spray more chemicals.
In contrast, the weather has turned more favorable in the Ivory Coast and Ghana, with rains and sunshine continuing to help pod development, analysts with ING Group, said in a note.
Harvest pressures in the Ivory Coast are limiting the upside in cocoa prices in the near term.
Government data showed that Ivory Coast shipped 284,633 million tons of cocoa to ports during the first 27 days of October, up 26% from 225,698 million tons shipped during the corresponding period a year ago.
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